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Nigeria’s ThankUCash secures $5.3M to build infrastructure for cashback, deals and BNPL services

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Loyalty, deals and rewards services are a rarity in most African markets. The unit economics and other factors such as currency instability make such businesses hard to pull off in the region.

Yet, ThankUCash, a platform launched in 2018 by Connected Analytics, has managed to thrive, proving that not all is gloom in the deals, coupon and rewards business. And to that end, the startup, which announced an undisclosed seven-figure seed last year, finally closed the round at $5.3 million.

VC firms 500 Global and Unicorn Growth Capital co-led the Lagos-based company’s seed round. It saw participation from U.S.-based accelerator Expert Dojo, Predictive VC, SaaS Growth Ventures, Betatron Venture Group, Accelerex Holdings. Individual investors like Andrew Dell, former CEO of HSBC and Craig Fenton of Google UK also took part.

The company plans to use the investment to expand within its home market Nigeria — where it operates in Lagos, Port Harcourt and Abuja — and outside to Ghana and Kenya. It also wants to improve its product offerings and add more staff.

For years, store-like businesses in Nigeria such as supermarkets and restaurants have operated offline, relying on bookkeeping and head knowledge to record their customers’ activities in their shops. This made it difficult to offer cash back and loyalty points to customers.

Online platforms like ThankUCash present these merchants with an opportunity to delve into rewards and help them retain loyalty and increase revenue.

CEO Simeon Ononobi started ThankUCash with Suraj Supekar, Madonna Ononobi and Harshal Gandole, who act as a chief technical officer, chief operating officer and senior vice president of engineering, respectively.

The multi-merchant rewards platform (which means customers can hop on from one merchant to another to earn loyalty points in another) allows customers to earn rewards anytime they shop with thousands of merchants listed on its app.

The business raised a $320,000 pre-seed after grabbing the attention of accelerators such as 500 Startups, Google Launchpad and other local investors like Microtraction and Ventures Platform.

Up until this point, ThankUCash said it has recorded over 600,000 users and onboarded over 1,000 stores on its platform. Also, it claims to have processed over $80 million in transaction volume.

Having matured as a business, Ononobi and his team want to take on a more complicated task: building infrastructure for companies that want to offer akin services.

“We are creating solutions that help SMEs succeed while increasing consumer buying power and opportunities. We want to build an infrastructure for rewards, loyalty, deals, buy now, pay later, cashback,” he said to TechCrunch on a call.

“Cashback was our low hanging fruit and an entry point. We’re still going to go into deals, couponing, gift cards, buy now, pay later, anything that will help the business grow, but at the same time, allowing the consumer increase in opportunities of buying.”

Ononobi, a serial entrepreneur who previously built a payments company and also apps for Nigerian banks and the government, reckons that ThankUCash will do to rewards the same thing Flutterwave and Paystack did to payments in Africa.

Some companies such as banks have launched cashback programs via debit cards to users in the past. But most of them have been generally inefficient, from setup down to collections and redeeming of points, and Ononobi argues that their inefficiencies boil down to no technical support. ThankUCash sees a gold mine to provide plugins banks and fintechs can tap into to offer cashback and rewards.

ThankUCash co-founders

The bit about buy now, pay later is fuzzy now since only a handful of prominent BNPL services in Africa. However, the company seems to be positioning itself for the imminent proliferation of such services buoyed by similar happenings globally where buy now, pay later services have seen an uptake as a result of pandemic-induced consumer behaviour.

“The technology is such that we have our machines in stores. So as customers request loans, we generate a code for it, customers input it into the POS machine and the merchant gets credited directly. The code can only be used in the store chosen and only for the loan amount requested, such that at the end of the day the customer is buying straight from the merchants,” explained the founder, who also mentioned that his startup might venture into offering buy now, pay later services itself in the future.

ThankUCash’s consumer-facing platform will remain operational. But to set the infrastructure play in motion, it has signed a partnership with payments company Interswitch to onboard its merchants.

The company, which is also in the process of making integrations with payments gateways, said a couple of bank partnerships are in its pipeline.

In terms of how ThankUCash makes money, merchants pay the company a fee on every purchase made in their stores. For instance, ThankUCash gets a 1.5% commission for every customer it brings into the store to redeem a 5% cashback item. The Lagos-based company also takes commissions for deals and plans to charge a “heavy onboarding fee” for businesses that want to use its APIs for its services, including buy now, pay later. 

ThankUCash has perfected one offering: the cashback product where merchants can get more walk-in customers. It’s improving the deals category, allowing merchants to sell products fast (by hiring ex-managers of DealDey, a Nigerian defunct deals company). And while currently building out its buy now pay later infrastructure (which gives businesses a chance to sell products regardless of whether customers have money or not), ThankUCash plans to add a fourth offering soon: a remittance product where merchants can sell directly to the diaspora.

The chief executive doesn’t give details about this product. Meanwhile, its investors, who have doubled down while privy to information like this, are enthused about “the continued evolution of the company”, a remark made by Amit Bhatti, the principal at co-lead investor 500 Global.

“Since going through 500 Global’s accelerator in 2019, we’ve been impressed by Simeon and the ThankUCash team’s progress in implementing a rewards system that works for Nigerian consumers, regardless of cash or credit or online or offline payment,” said the principal. “It’s a win-win for businesses and banks, too, as TUC gives them the tools and data they need to grow.”

The 45-man team has hired Aaron Tindiseega to lead its expansion into Kenya and the eastern Africa region. The Ugandan professional has experience working for banks and tech companies like Uber, Standard Chartered Bank and Stanbic IBTC. For its expansion into Ghana, Kiki Anku, who has worked at Apple and a couple of startups, will spearhead the task.

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A network of knockoff apparel stores exposed 330,000 customer credit cards

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If you recently made a purchase from an overseas online store selling knockoff clothes and goods, there’s a chance your credit card number and personal information were exposed.

Since January 6, a database containing hundreds of thousands of unencrypted credit card numbers and corresponding cardholders’ information was spilling onto the open web. At the time it was pulled offline on Tuesday, the database had about 330,000 credit card numbers, cardholder names, and full billing addresses — and rising in real-time as customers placed new orders. The data contained all the information that a criminal would need to make fraudulent transactions and purchases using a cardholder’s information.

The credit card numbers belong to customers who made purchases through a network of near-identical online stores claiming to sell designer goods and apparel. But the stores had the same security problem in common: any time a customer made a purchase, their credit card data and billing information was saved in a database, which was left exposed to the internet without a password. Anyone who knew the IP address of the database could access reams of unencrypted financial data.

Anurag Sen, a good-faith security researcher, found the exposed credit card records and asked TechCrunch for help in reporting it to its owner. Sen has a respectable track record of scanning the internet looking for exposed servers and inadvertently published data, and reporting it to companies to get their systems secured.

But in this case, Sen wasn’t the first person to discover the spilling data. According to a ransom note left behind on the exposed database, someone else had found the spilling data and, instead of trying to identify the owner and responsibly reporting the spill, the unnamed person instead claimed to have taken a copy of the entire database’s contents of credit card data and would return it in exchange for a small sum of cryptocurrency.

A review of the data by TechCrunch shows most of the credit card numbers are owned by cardholders in the United States. Several people we contacted confirmed that their exposed credit card data was accurate.

TechCrunch has identified several online stores whose customers’ information was exposed by the leaky database. Many of the stores claim to operate out of Hong Kong. Some of the stores are designed to sound similar to big-name brands, like Sprayground, but whose websites have no discernible contact information, typos and spelling mistakes, and a conspicuous lack of customer reviews. Internet records also show the websites were set up in the past few weeks.

Some of these websites include:

  • spraygroundusa.com
  • ihuahebuy.com
  • igoodlinks.com
  • ibuysbuy.com
  • lichengshop.com
  • hzoushop.com
  • goldlyshop.com
  • haohangshop.com
  • twinklebubble.store
  • spendidbuy.com

If you bought something from one of those sites in the past few weeks, you might want to consider your banking card compromised and contact your bank or card provider.

It’s not clear who is responsible for this network of knockoff stores. TechCrunch contacted a person via WhatsApp whose Singapore-registered phone number was listed as the point of contact on several of the online stores. It’s not clear if the contact number listed is even involved with the stores, given one of the websites listed its location as a Chick-fil-A restaurant in Houston, Texas.

Internet records showed that the database was operated by a customer of Tencent, whose cloud services were used to host the database. TechCrunch contacted Tencent about its customer’s database leaking credit card information, and the company responded quickly. The customer’s database went offline a short time later.

“When we learned of the incident, we immediately contacted the customer who operates the database and it was shut down immediately. Data privacy and security are top priorities at Tencent. We will continue to work with our customers to ensure they maintain their databases in a safe and secure manner,” said Carrie Fan, global communications director at Tencent.

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All Raise CEO steps down again

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Less than a year after assuming the role, All Raise CEO Mandela SH Dixon has stepped down from her position at the nonprofit. The entrepreneur, who previously ran Founder Gym, an online training center for underrepresented founders, said in a blog post that the decision was made after she realized “being in the field working directly with entrepreneurs everyday” is her passion. Dixon said that she will be exploring new opportunities in alignment with that.

Her resignation is effective starting February 1st, 2023. She will remain an advisor to the Bay Area-based nonprofit.

This is the second chief executive to leave All Raise since it was first founded in 2017. In 2021, Pam Kostka resigned as the helm of the nonprofit to rejoin the startup world as well; Kostka is now an operator in residence and limited partner at Operator Collective, according to her LinkedIn. With Dixon gone, Paige Hendrix Buckner, who joined the outfit as chief of staff nine months ago, will step in as interim CEO. In the same blog post, Buckner wrote that “Mandela leaves All Raise in a strong position, and I’m grateful for the opportunity to continue the hard work of diversifying the VC backed ecosystem.”

Dixon did not immediately respond to comment on the record. It is unclear if All Raise is immediately kicking off a permanent CEO search.

The nonprofit has historically defined its goals in two ways: first, it wants to increase the amount of seed funding that goes to female founders from 11% to 23% by 2030, and, second, it wants to double the percentage of female decision-makers at U.S. firms by 2028.

In previous interviews, Dixon said that the company will work on creating explicit goals around what impact it wants to have for historically overlooked individuals. The data underscores the challenge ahead. Black and LatinX women receive disproportionately less venture capital money than white women; non-binary founders can also face higher hurdles when seeking funding, as All Raise board member Aileen Lee noted in the blog post.  The nonprofit has created specific programs for Black and Latinx founders but has not disclosed a specific goal for the cohort yet. These disconnects can be lost if not tracked. All Raise’s last impact report was published in 2020 and they’re working on bringing that analysis back, Lee tells TechCrunch in an interview.

“All Raise is in great hands with Paige as interim leader and we’ve got a lot of exciting things that we’re shaping and scaling,” Lee said. “We have to all continue to link arms to try and continue to make improvements for our industry…we’ve made good progress that we can’t let up.”

Since launch, the nonprofit has raised $11 million in funding, and opened regional chapters in New York, Boston, Los Angeles, Chicago, DC and, soon, Miami.

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Shopping app Temu is using TikTok’s strategy to keep its No. 1 spot on App Store

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Temu, a shopping app from Chinese e-commerce giant Pinduoduo, is having quite the run as the No. 1 app on the U.S. app stores. The mobile shopping app hit the top spot on the U.S. App Store in September and has continued to hold a highly-ranked position in the months that followed, including as the No. 1 free app on Google Play since December 29, 2022. More recently, Temu again snagged the No. 1 position again on the iOS App Store on January 3 and hasn’t dropped since — even outpacing competitor Shein’s daily installs in the U.S.

Offering cheap factory-to-consumer goods, Temu provides access to a wide range of products, including fast fashion, and pushes users to share the app with friends in exchange for free products, which may account for some of its growth. However, the large majority of its new installs come from Temu’s marketing spend, it seems.

When TechCrunch covered Temu’s rise in November, the app had then seen a little more than 5 million installs in the U.S., according to data from app intelligence firm Sensor Tower, making the U.S. its largest market. Now, the firm says the app has seen 5 million U.S. installs this January alone, up 19% from 4.2 million in the prior 22 days from December 10 through December 31.

According to Sensor Tower estimates, Temu has managed to achieve a total of 19 million lifetime installs across the U.S. App Store and Google Play, more than 18 million of which came from the U.S.

The growth now sees Temu outpacing rival Shein in terms of daily installs. In October, Temu was averaging around 43,000 daily installs in the U.S., the firm said, while Shein averaged about 62,000. In November, Temu’s average daily installs grew to 185,000 while Shein’s climbed to 70,000 and last month, Temu averaged 187,000 installs while Shein saw about 62,000.

The shopping app’s fast rise recalls how the video entertainment platform TikTok grew to become the most downloaded app worldwide in 2021, after years of outsized growth. The video app topped 2 billion lifetime downloads by 2020, including sister app Douyin in China, Sensor Tower said. Combined, the TikTok apps have now reached 4.1 billion installs.

Like Temu, much of TikTok’s early growth was driven by marketing spend. The video app grew its footprint in the U.S. and abroad by heavily leveraging Facebook, Instagram, and Snapchat’s own ad platforms to acquire its customers. TikTok was famously said to have spent $1 billion on ads in 2018, even becoming Snap’s biggest advertiser that year, for instance.

By investing in user acquisition upfront, TikTok was able to gain a following which then improved its ability to personalize its For You feed with recommendations. Over time, this algorithm became very good at recognizing what videos would attract the most interest thanks to this investment, turning TikTok into one of the most addictive apps in terms of time spent. As of 2020, kids and teens began spending more time watching TikTok than they did on YouTube. And earlier this month, Insider Intelligence data indicated all TikTok users in the U.S. were now spending an average of nearly 1 hour per day on the app (55.8 minutes), compared with just 47.5 minutes on YouTube, including YouTube TV.

While Temu is nowhere near TikTok’s sky-high figures, it appears to be leveraging a similar growth strategy. The company is heavily investing in advertising to acquire users, which it uses to personalize the shopping experience. One of Temu’s key features, in fact, is its own sort of For You page that encourages users to browse trending items “Selected for You.” In addition to gamification elements, Temu also puts heavy emphasis on recommending shops and products on its home page, which is informed by its user data.

But the app’s growth doesn’t seem to be driven by social media. While the Temu hashtag (#temu) on TikTok is nearing 250 million views, that’s not really a remarkable number for an app as big as TikTok where something like #dogs has 120.5 billion views. (Or, for a more direct comparison, #shein has 48.3 billion views.) That suggests Temu’s rise isn’t necessarily powered by viral videos among Gen Z users or influencer marketing, but rather more traditional digital advertising.

According to Meta’s ad library, for instance, Temu has run some 8,800 ads across Meta’s various platforms just this month. The ads promote Temu’s sales and its extremely discounted items, like $5 necklaces, $4 shirts, and $13 shoes, among other deals. These ads appear to be working to boost Temu’s installs, allowing the app to maintain its No. 1 slot on the App Store’s “Top Free” charts, which are heavily influenced by the number of downloads and download velocity, among other things.

Of course, having a high number of downloads doesn’t necessarily mean Temu’s app will maintain a high number of monthly active users. Nor does it mean those users won’t churn out of the app after their initial curiosity has been abated. Still, Temu’s download growth saw it ranking as the No. 1 “Breakout” shopping app by downloads in the U.S. for 2022, according to data.ai’s year-end “State of Mobile” report. (Data.ai calculates “Breakout” apps in terms of year-over-year growth across iOS and Google Play.)

Because Temu’s growth is more recent, the app did not earn a position on the Top 10 apps in 2022 in either the U.S. or globally in terms of downloads, consumer spend, or monthly active users, on this report. Instead, most of those spots still went to social media apps, streamers, and dating apps like Bumble and Tinder. The only retailer to find a spot on these lists was Amazon, which was the No. 7 app worldwide by active users and the No. 8 most downloaded in the U.S.

Temu’s marketing investment may not pay off as well as TikTok’s did, though, as other discount shopping apps saw similar growth only to later fail as consumers found that, actually, $2 shirts and jeans were deals that were too good to be true. Wish famously fumbled as consumers grew frustrated with long delivery times, fake listings, missing orders, poor customer service, and other things consumers expect from online retail in the age of Amazon.

Temu today holds a 4.7-star rating on the U.S. App Store, but those ratings have become less trustworthy over the years due to the ease with which companies can get away with fake reviews. Dig into the reviews further and you’ll find similar complaints to Wish, including scammy listings, damaged and delayed deliveries, incorrect orders and lack of customer service. Without addressing these issues, Temu seems more likely to go the way of Wish, not TikTok, no matter what it spends.

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